INCOME TAXES

The components of the income tax provisions
for 2018 and 2017 are as follows:

2018

2017

Current provision:

Federal

$

-

$

-

State

-

-

Deferred benefit:

Federal

(377,512

)

(660,421

)

State

(174,325

)

(119,597

)

(551,837

)

(780,018

)

Change in valuation allowance

551,837

780,018

Total Provision

$

-

$

-

The difference between the income tax provision
and income taxes computed using the U. S. federal income tax rate of 21% consisted of the following:

2018

2017

Provision at statutory rate

21.0

%

34.0

%

State taxes, net of federal benefit

8.84

%

5.8

%

Nondeductible and other items

(8.84

)%

(18.8

)%

Change in valuation allowance

(21.0

)%

(21.0

)%

Total

(0.0

)%

(0.0

)%

Deferred income taxes reflect the net tax effect
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used
for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2018 and 2017 are as follows:

2018

2017

Deferred tax assets:

Net operating loss carry forwards

$

648,891

$

746,919

Share-based compensation

592,023

174,465

Accrual to cash

26,853

(45,292

)

Other

379,096

2,278,510

Total deferred tax assets

1,646,863

3,154,602

Valuation allowance

(1,646,863

)

(3,098,002

)

-

56,600

Deferred tax liabilities:

Tax deductible licensing agreement

-

(56,600

)

Accrual to cash

-

-

Other

-

-

Total deferred tax liabilities

-

(56,600

)

Net deferred tax assets (liabilities)

$

-

$

-

A full valuation allowance has been provided
against the Company’s deferred tax assets at December 31, 2018 as the Company believes it is more likely than not that sufficient
taxable income will not be generated to realize these temporary differences.

The Company has Federal net operating losses
(NOLs) of approximately $8.4 million which begin to expire in the years beginning in 2033. Pursuant to Section 382 of the Internal
Revenue Code, use of the Company’s NOLs and credit carry forwards may be limited if the Company experiences a cumulative
change in ownership of greater than 50% in a moving three-year period.

The Company also has federal credits that begin
to expire 2031 and state tax credits that may be carried forward indefinitely.

The Company provides for uncertain tax positions
when such tax positions do not meet the recognition thresholds or measurement standards as set forth in ASC Topic 740 Income Taxes,
regarding accounting for uncertainty in income taxes. Amounts for uncertain tax positions are adjusted in periods when new information
becomes available or when positions are effectively settled. There are no unrecognized benefits related to uncertain tax positions
as of December 31, 2018. The Company does not anticipate that there will be material change in the liability for unrecognized tax
benefits within the next 12 months.

On December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes
new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21%, effective
January 1, 2018. For certain deferred tax assets and deferred tax liabilities, we have recorded a provisional decrease of $273,152,
with a corresponding net adjustment to valuation allowance of $273,152 as of December 31, 2018.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.